Interest accrued on Debentures

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 March 2010 The debenture shall carry and entitled to a coupen rate of 4% p.a. compounded on due dates and the Company shall pay to the investors such interests on the outstanding debentures from the time to time in arrears, on March 15 and September 15 each year.

What does this mean?

We should accrue interest only on the respective due date?

or

We can accrue interest on an intervening period, if we have to prepare financials at intervening period?

vrnanda

vrnanda (Expert)
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28 March 2010 Hi,

When the company has the debentures in Financial statments with entitlement to interest.
Interest will accrue on a timely basis eg. month on month or period to period.

However the so accrued will become accrued and due on the said due dates.

If the company has to prepare the financial statements, it has to provide for the interest expense upto that period and show it under interest accrued but not due.

Let us say if u r preparing the financials as on September 30, interest portion upto September 15, will be the interest accrued and due will be shown as part of the debentures and interest for the period from September 16 to September 30, should be shown under current liabilities interest accrued but not due.

hope this is helpful.

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